UK: More than 300 delegates from 18 countries around the globe gathered in London last week for the 2015 Serviced Apartment Summit.
After a day touring London serviced residences, followed by a
drinks reception at the Grosvenor House Apartments by Jumeirah
Living, the conference kicked off with a welcome from host Piers
Brown, who emphasised the need for a sense of togetherness in the
industry as it matures and gains recognition as a major player in
the hospitality industry.
The theme was echoed as Piers spoke with keynote guest Ufi Ibrahim, the CEO of the British Hospitality Association (BHA). Ibrahim stated that the hospitality and tourism industry deserves greater respect from the British government, and warned of the growing importance of the sharing economy accommodation options: "Chancellor George Osborne has advised government employees to stay in sharing economy accommodation when travelling on government business as it is a good value proposition."
Ibrahim also spoke about the BHA's serviced apartment chapter, and its role in lobbying government on issues both specific to serviced apartments, and to the wider industry.
Thomas Emanuel of STR Global then presented some intriguing numbers, revealing the momentum in the UK serviced apartment sector. The company is now analysing performance data from 200 serviced apartment locations, and a general trend is emerging of strong REVPAR growth. Regional highlights included Birmingham which has seen double-digit REVPAR growth, partly thanks to demand from the car manufacturing industry and the development of New Street station. Across the UK, serviced apartments recorded an average of 80.1 per cent occupancy, with regional cities performing extremely well.
Arlett Oehmichen of HVS then revealed the results of her company's latest research. HVS spoke to a number of investors and lenders active in or considering the serviced apartment sector. The UK was at the top of the wish list for 60 per cent of them, with apart hotels much more attractive than corporate housing. Only 15 per cent of lenders would lend against development, but this is an improvement on the situation two years ago when very few would consider it. Around a third of the investors said they though serviced apartments have moved from a niche to mainstream, but none of the banks echoed this sentiment.
Joining Oehmichen on stage, Andrew Fowler of Union Hanover Securities said: "Strong brands are they key to driving the serviced apartment sector from niche to mainstream, and getting in to the consumer consciousness, as well as better establishing the sector in the banks' consciousness." Andrew Shaw of IHG added that the pace of development in the UK and Europe is growing.
A breakout session on the Middle East and African markets began with some eye-catching statistics from Filippo Sona of Colliers MENA. In the MEA region serviced apartment average occupancy is 71 per cent, compared to 67 per cent for hotels, while ADR is $110 dollars, compared with $152.
Sona emphasised the huge potential for improved branding in the region, stating that less than 22 per cent of serviced apartment inventory in MEA is branded. Micro-urbanisations in sub-Saharan African cities in particular offer huge opportunities for brands to convert existing properties, said Sona. He also discussed the typical Dubai business model for serviced residences, where the developer sells all the units to individual investors.
Patrick Smith of IFA Hotel Investments said: "It's essential to partner with strong local partners. There are great opportunities in the Middle East and Africa but you need to go in with your eyes wide open as to how business is done in different parts of the world."
Sona pointed out that serviced apartments, of all the hospitality options, comply most closely to Sharia principles. Developing Sharia-compliant projects is very complicated but offers huge opportunities, he said.
A session on marketing serviced apartments to SMEs began with Jo Redman of SACO stressing the importance of knowing who your customer is before deciding on a marketing strategy. She cited two techniques at either end of the technology spectrum which had been successful for SACO: investing heavily in Google optimisation, and A-boards outside properties. Peter Heule of Short Stay Group said: "get your staff to go out and knock on the doors of local businesses and let them know you are there and what you do - it's not selling to them, it's offering a service to your neighbourhood."
Mark Harris of the Travel Intelligence Network added that OTAs are a very effective way of reaching customers and should be embraced - "they are a marketing cost that you need to build in to your budget." he said. he also said that Airbnb is a great ally to serviced apartments: "They are raising awareness that there are alternatives to hotels."
Redman spoke of the importance of personal relationships: "It's important to find the right person in any business - the one who makes the decisions on accommodation - and make them aware of what you can offer them. Nurture that relationship - people like doing business with people they like."
Harris added that the "best place to invest the majority of a small marketing budget is definitely in your own website. It's essential that it offers real-time pricing and booking." Moving on to social media, he said: "You can't afford to dabble. If you can't do it properly, don't do it at all."
The Meet the Leaders panel - now an established annual highlight of the Summit - produced some interesting debate. Sean Worker of BridgeStreet Global Hospitality said: "We as an industry need to embrace technology and improve our speed of reaction. We need to make our product easier to purchase."
Guus Bakker of Frasers Hospitality said that social media "has highlighted the importance of individuality - people don't want cookie cutter products."
Charlie McCrow of The Apartment Service said the sector needs to lok carefully at its hospitality skills, saying: Owner/operators from a property background go in to serviced apartments looking to improve yields but they don't necessarily have hospitality training and skills."
Moderator Russell Kett asked panellists to make a prediction for the future of the industry. Bakker predicted sector consolidation and more integrated technology, while Worker forsees a "clear differentiation between b2b and b2c offerings in 10 years' time."
Speaker presentations from the Summit can be downloaded here.
Delegate reaction from Serviced Apartment Summit 2015
"I see so much potential in this segment of the hospitality industry and events like the Serviced Apartment Summit help to further innovate and unlock the potential value."
Marc Jongerious, co-founder and managing director, Zoku
"Huge Thanks and congratulations for organising another wonderful Serviced Apartment Summit. I found the two days to be hugely informative and engaging. I sincerely look forward to attending many more of these events."
Nouran Zarroug, business development director, Go Native
"The Serviced Apartment Summit has once again proven that there is still a great deal to learn and a huge amount of potential to unlock. It is a privilege to have the opportunity to sit down next to some of the industry's most important players, to offer insight on the African marketplace, and to apply lessons learned by our colleagues in larger markets that we seek to emulate."
Abi Adisa, CEO, Amara Suites
"The 2015 Serviced Apartment Summit was considerably bigger than I had anticipated, with a high profile attendance and great networking opportunities. For Invesco Real Estate, the event represented a platform to connect with key players in the sector from an operating, lending and development angle, to explore investment opportunities in the sector together."
Lisa Neubueser, director, Invesco Real Estate
"I enjoyed discussing travel buyers' accommodation requirements in an open format and the event gave me an updated knowledge on the sector."
Jan Jacobsen, global projects manager, global travel, meetings and events, AIG